How Chinese Small Nucleic Acid Drug Companies Break Through Core Technology Patent Barriers: Insights from VB ThinkTank

After experiencing two developmental troughs, oligonucleotide therapeutics have entered a harvest period driven by the maturation of chemical modification and delivery technologies, with their clinical advantages and market value becoming increasingly prominent. However, given that leading companies have firmly secured core technology patents, how can domestic oligonucleotide drug innovators build patent barriers? What R&D strategies should they adopt?

April 27,VCBeat, in partnership with GTJA Investment, has invited industry partners from the small nucleic acid drug sector—Sirnaomics and Youjia Bio—to comprehensively and deeply share their insights on industry development through “report presentations” and “frontline discovery,” with the aim of accelerating the release of innovative potential.

▲ [VBInsight Think Tank] – [Oligonucleotide Drug Series]

Front row (top), from left to right: Dr. Cui Wenhao, Chairman of Youjia Bio; Dr. Zhao Xiaoyang, Head of the GTJA Investment Research Institute

Second row (bottom), from left to right: Wang Shiwei, Senior Researcher at VCBeat Institute; Dr. Lu Yang, Founder of Sirnaomics

Currently, leading small nucleic acid drug developers all possess proprietary technology patents. Taking delivery technology—one of the most prominent R&D challenges—as an example, Ionis and Alnylam own conjugated delivery technologies such as GalNAc; Arbutus and Ribo Life Science are renowned for their lipid nanoparticle (LNP) delivery systems; the Anderson Cancer Center has independently developed exosome-based delivery technology; while Arrowhead Pharmaceuticals and Starnovo have distinguished themselves with peptide nanoparticle (PNP) delivery technology. In light of this landscape, how should innovative pharmaceutical companies in China build their own patent barriers?

Dr. Cui Wenhao, Chairman of Youjia Biostated,Patents for nucleic acid drugs fall into two categories: delivery systems and active pharmaceutical ingredients (APIs). Only by considering both can potentially viable products be identified during the R&D project initiation phase.“We often liken the development of an oligonucleotide drug to cooking rice: the API is the rice, and the delivery system is the shovel. Only with both can you cook rice properly. When it comes to patents for nucleic acid drugs, many people assume that only the delivery system is patent-related. In reality, however, the core gene sequence component of the siRNA API is just as important as the delivery system. If we are highly interested in a particular target during the project initiation phase but discover through patent searches that the gene sequences for this target are largely already covered by existing patents—with sequence rights substantially allocated—then pursuing R&D on this target would face significant challenges at the level of patent technology. Of course, specific patent situations vary by product, necessitating careful formulation of patent strategies. For biotech companies, whose core value may hinge on just one or two key patents, it is essential to thoroughly consider intellectual property layout and protection. Therefore,”In addition to focusing on patents for delivery system vectors, we must also lay the groundwork early on in target selection and API selection, including conducting patent searches.”

Dr. Lu Yang, Founder of Starna PharmaceuticalsRecommendations for Establishing Patent Barriers from Three Perspectives: Gene Sequences, Chemical Modifications, and Modification Sites and Arrangements. Regarding gene sequences, further in-depth research can be conducted to identify other effective sequences, thereby expanding the scope of development. In terms of chemical modifications, beyond well-known methods such as OMe (2'-O-methyl), it is crucial to explore other pharmaceutically acceptable modification strategies or even pursue structural innovations. The sites and arrangements of modifications also present an area for exploration; currently, several new patents involve modifications at different sites. If the modified portions exhibit unique spatial configurations, new intellectual property rights can be secured.

So, with the siRNA field continuing to heat up, do domestic innovative pharmaceutical companies still have an opportunity to enter this track?

Dr. Lu YangI hope everyone can pursue genuine innovation:We should not merely follow others’ line of thinking; during R&D, shouldn’t we consider which diseases in China are more urgent to address?This actually represents a vast space for innovation. For instance, in the field of oncology, cancer types such as cholangiocarcinoma, esophageal cancer, and gastric cancer are classified as orphan diseases in Europe and the United States, particularly in the U.S., but they affect a large patient population in China. Therefore, can we identify new breakthroughs in these areas?

“From this perspective, there are numerous opportunities for innovation in the development and application of intellectual property (IP) for siRNA drugs. For instance, even a minor modification to chemical conjugation technologies whose patents have expired can establish proprietary IP for active pharmaceutical ingredients (APIs). Moreover, based on our experience, patent protection for all oligonucleotide sequences holds exploitable potential, regardless of whether they target high-profile ‘star’ targets. We encourage stakeholders to pursue these avenues with confidence.”

And inDr. Wenhao CuiIt appears that areas with higher risks may harbor greater opportunities. In the current landscape, domestic small nucleic acid drug biotech companies must carefully consider their project selection strategies. A critical question worth pondering is whether to pursue safe, star-target projects with proven druggability (such as PCSK9) or to embark on truly innovative targets through independent R&D. This decision often serves as a test of a team’s risk resilience. While pursuing genuine source innovation entails substantial risks, it also presents more significant opportunities.

Delivery systems are an unavoidable technical focus for small nucleic acid drugs. Currently, the most mature technologies primarily include GalNAc and lipid nanoparticles (LNPs). LNPs have attracted significant attention from numerous pharmaceutical companies due to their advantages, such as protecting encapsulated nucleic acid therapeutics from degradation and clearance, and facilitating their transmembrane transport to target sites. However, the initial patents for LNP technology are owned by Arbutus Biopharma of Canada. Leading global developers of small nucleic acid drugs currently rely on patent licenses from Arbutus, making LNP an insurmountable upstream patent barrier for countless nucleic acid drug companies. When will the barriers surrounding LNP delivery systems be broken?

Dr. Wenhao CuiIt is worth noting that the first siRNA product approved by the U.S. FDA utilized lipid nanoparticles (LNPs) for delivery. However, due to the complexity of its formulation—specifically involving the ratio of different components and the selection of membrane-penetrating molecules—it faces inherent limitations that are difficult to overcome. Nevertheless, new delivery systems are continuously emerging, with technologies such as exosomes and polymer nanoparticles (PNPs) maturing rapidly. Therefore, it is worthwhile to consider the future growth potential of LNPs. If alternative delivery vectors demonstrate equivalent or superior parameters, small nucleic acid therapeutics will have a broader range of options. It is anticipated that ongoing breakthroughs in delivery systems will continue to emerge during the development of small nucleic acid drugs, thereby providing greater flexibility in formulation design.

Dr. Lu YangFrom the perspective of siRNA drug development, the role of LNPs is gradually fading. “In fact, LNPs have not performed that well in siRNA drug delivery. Moreover, technologies such as GalNAc have already been validated and demonstrate superior targeting capabilities. At Shengnuo, our PNPs offer more advantages over LNPs. First, their targeting ability can be further optimized through our design; second, there will be greater improvements in safety, efficacy, and particularly in scalable manufacturing capacity.”

As the oligonucleotide therapeutics sector matures, innovative pharmaceutical companies face a strategic dilemma in R&D: whether to pursue collaborative development with biotech firms and biopharmaceutical companies, or to build their own comprehensive R&D infrastructure.

Dr. Wenhao CuiIt is argued that analysis should be conducted based on the specific needs of the enterprise: “In actual R&D work, there are differing views among companies on whether to adopt a heavy-asset model with significant investment in building GMP-compliant facilities and integrating the entire manufacturing process into their own system, or to adopt an asset-light approach by merely holding the product rights and outsourcing production (under the MAH system). When choosing outsourcing and collaboration, a very practical issue is that you must share many key technical processes to enable your CDMO or partners to deliver the desired product. In this scenario, the critical consideration is how to protect a company’s core technologies. If the manufacturing process, formulation, and analytical methods are highly proprietary and the company wishes to keep them confidential, it will need to build its own team and comprehensive production facilities to ensure robust intellectual property protection. Therefore, after comprehensive discussion of these aspects, enterprises can determine the model best suited to their needs.”

InDr. Lu YangIt appears that,Various R&D strategies can be explored, but most importantly, choices should be made based on one’s actual circumstances.“Taking Sinopep as an example, our peptide nano-delivery technology is inherently advanced, meaning that even the most sophisticated CDMOs in China lack the capability to manufacture it. Therefore, from a strategic perspective, we must advance the development of our own production capabilities. Furthermore, if a company adopts a collaborative model, it must consider time efficiency and capital utilization. Engaging a CDMO does not necessarily guarantee superior quality or faster turnaround; the resulting product may be suboptimal, and scheduling production could entail a wait of several months. Hence, the advantage of establishing a comprehensive in-house R&D and manufacturing system lies in the enhanced value proposition it offers when partnering with large pharmaceutical companies.”

Dr. Zhao Xiaoyang, Head of GTJA Investment Research InstituteFrom the perspective of investment institutions, we put forward our own views: "We have compared small nucleic acid drug companies, taking Alnylam and Ionis as examples. Alnylam owns more than 5,000 RNAi-related patent intellectual property rights, while Ionis has over 3,000. However, the difference lies in the fact that the vast majority of Alnylam's core pipeline is independently advanced, and it has generated substantial cash revenue through patent licensing. In contrast, 68% of Ionis' pipeline is co-developed with large pharmaceutical companies, which may result in lower future sales distribution returns, leading to potentially less favorable market expectations for Ionis compared to Alnylam."While collaborative development allows startups to gain endorsement from major pharmaceutical companies and entails relatively lower risk, the long-term returns are correspondingly modest. In contrast, building a comprehensive in-house platform requires substantial upfront capital investment; although this approach carries higher risk, it can yield substantial rewards upon success.Therefore, from an industry perspective, the choice between the two remainsIt depends on the founders’ strengths and the company’s positioning; whether in target discovery or vector development, capabilities are entirely determined by the enterprise’s core competencies.“If a company holds an advantage in vector development, its shortcomings in pipeline expansion and collaborative development can be addressed at a later stage. For investment institutions, we prefer that companies view licensing partnerships as a means to generate cash flow or expand market reach, rather than as the ultimate goal of corporate development. By adopting a collaborative model for R&D and commercialization, biotech firms can leverage the ecosystem strength of large pharmaceutical companies to accelerate clinical trials and sales, which also serves as a rapid validation of their technology and products. However, after such validation, we still expect companies to gradually establish robust, self-sufficient R&D and commercialization systems and grow stronger, so that China’s biopharmaceutical industry can truly thrive. In short, each company has its own ‘DNA’; it should capitalize on its strengths and align with prevailing trends.”

So, how does GTJA make trade-offs in its investment strategy?Dr. Zhao XiaoyangZhao Xiaoyang stated that the background of the research team, technological platforms and patent portfolios, as well as capabilities for global expansion and commercialization, have become top priorities for investment institutions. Zhao Xiaoyang remarked: “Regarding the research team’s background, key factors supporting a company’s future development include whether the entire team possesses long-term technical accumulation, whether the technology is globally leading, and whether the team has established core technological barriers. In terms of technological platforms and patent layouts, important criteria for evaluating small nucleic acid drug companies include whether the enterprise has independent R&D platforms for chemical modification and delivery systems along with patent protection; whether the patents cover the most core components of nucleic acid drugs; and the strength and quality of such protection. As for commercialization capabilities and global expansion, we place significant emphasis on whether a company can secure commercial licensing collaborations with major international pharmaceutical firms, and whether it can communicate effectively with regulatory bodies such as the U.S. FDA and the European EMA in the design and execution of clinical protocols. Recently, several Chinese pharmaceutical companies have encountered obstacles in their global expansion efforts. Innovent Biologics’ sintilimab was rejected due to concerns over its clinical value and the singularity of its clinical trials. Similarly, Hutchmed’s surufatinib, Allist Pharmaceuticals’ plinabulin, and Junshi Biosciences’ toripalimab faced setbacks in approval processes due to reliance on single-region clinical trials. These cases indicate that the ability to initiate Multi-Regional Clinical Trials (MRCT) and obtain sufficiently robust data is a crucial factor in assessing a company’s future capability for global expansion.”

The design and development of oligonucleotide therapeutics are not constrained by protein druggability or target discovery. With advances in AI-assisted drug design, chemical modification technologies, and delivery systems, oligonucleotide drugs are poised to cover a broader range of indications and potentially replace certain existing therapies, indicating a vast potential market size. Although there is currently a significant gap between domestic and international R&D progress, the landscape will ultimately shift with the emergence of innovative Chinese oligonucleotide drug companies.

To obtain this issue’s Panel report on oligonucleotide therapeutics released by GTJA, follow the VCBeat New Medicine WeChat official account and reply with “Oligonucleotide Report” to receive it free of charge.

For more information on this issue’s activities, please scan the QR code below to access the video replay.

To learn more about the oligonucleotide therapeutics industry, please scan the QR code below to add our assistant and join the [Oligonucleotide Therapeutics] Industry Exchange Group.